Money Management says "NO TRADE"
Well, today I can't say there was nothing going on. I can say, however, I did nothing. There were a couple of crossovers today. We had one at 1:45am when the trend was up, but stochastics and RSI didn't confirm so we stayed out of that one. There was another crossover a 8:45 am. This one was interesting. The UK CPI had come out at 8:30 am and was well above expectation. The initial reaction made the pair shoot up almost 100 pips in less than 10 minutes. At the open of the 8:45 bar the pair tanked heavily and created the crossover. This is where I had to make a decision. The trend was down at that point. The confirmation of the signals made it a valid short trade. But at this point the entry would have been 1.9484 and my stop would have had to be at 1.9586. That is a 102 pips stop which represents 2% on one lot. My profit potential was only 34 pips to the next 50 level and the weird volatility and irrational behavior of the pair made me decide that the risk reward ratio wasn't there. So I stayed out.
The pair did go down but we would have had to sell prior to the news hitting at 8:30 am and we would have made 18 pips.
I do not regret staying out of this trade. It was a decision based on market conditions and money management.
In any case, I know people who took the trade and they're happy with it. So be it. To each his/her own. All I know is there would have been no smiles if the pair moved the other way and killed you for 2% per lot.
Here are the charts and the way it could have been traded.
Talk to you soon.
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